When it comes to cryptocurrency, the name of the game is to accumulate as much Bitcoin and Ethereum as possible. They are considered to be the only two blue-chip assets in the crypto market and have the best chance to be around for the long term.
But what about the shorter term? What is next for Ethereum, and why should you care?
Ethereum was one of the biggest winners during the last bull cycle. Rising from $80 in March 2020, to nearly $5,000 in November 2021. Even with that incredible success, many in the crypto market were left disappointed during the last bull cycle. There were predictions of how Ethereum was about to soar up to $10k. Some of the biggest Ethereum supporters were even predicting prices of $20k and beyond. However, prices never reached those astronomical values. Instead, 2022 was a year of disappointments, and not only with Ethereum. Bitcoin also fell short of the lofty price predictions that many had been anticipating for it.
We have only ourselves to blame. 2022 was a year of self-inflicted mistakes and a domino cascade of insolvencies due to irresponsible leverage and lending. It led many to wonder if the cryptocurrency market would even be able to survive the windfall from this. However, let me tell you why all of this made me even more bullish about Ethereum’s future.
Shanghai Upgrade
The first huge item coming up on Ethereum’s horizon is the Shanghai upgrade. While this likely won’t have an instant effect on the price of ETH, let me tell you why it will give confidence in the platform a huge boost. The reason for this is that Shanghai will finally allow users who locked up their ETH to stake into Ethereum 2.0 for an undefined period of time, to finally withdraw.
This meant that only the biggest supporters of Ethereum would lock up their ETH in staking because they truly believed that the upgrades would go smoothly. There was a real risk that either something would go wrong, or that we’d never be able to withdraw. Having the ability to withdraw finally unlocked will bring more users to Ethereum. Especially considering the current state of the crypto lending market. There may not be a better option currently to earn passive income in the crypto market with blue-chip assets.
Layer 2s
Going forward Layer 2s will be the big thing on Ethereum. Similar to having a checking account and savings account in a bank. You will perform your everyday transactions on Layer 2s such as Optimism or Arbitrum. Then you will perform your special or big transactions with Ethereum on Layer 1.
The benefits of using layer 2s are that they will make transactions much faster and cheaper. This means that the ETH ecosystem will suddenly become much more affordable and viable for everyone to use. The ETH ecosystem is unmatched in crypto when it comes to adoption and development. But during the last bull cycle, gas fees got out of control. In some cases, fees were hundreds and even thousands of dollars.
Just a few weeks ago Coinbase announced that they were making their own layer 2 using Optimism called BASE. This should be a clear sign to you in what direction the cryptocurrency market is heading towards.
For what seems like forever, there has been a rumored Arbitrum airdrop. Once that airdrop and token are finally released they could be the fuel to ignite this whole market. Similar to how the Uniswap airdrop re-ignited airdrops and charged the crypto market right before Bitcoin would reach new highs.
DeFi Summer 2.0
Many people have forgotten that DeFi summer in 2020 was the first factor that perhaps not only caused Ethereum’s price to rise, but some even claim it was what started the entire bull market. Since then the DeFi hype slowed down significantly due to the insane gas fees on Ethereum, but now Layer 2s helping ETH to finally scale and become affordable. And also due to the corrupt insolvencies that we saw in 2022. I believe these will be the causes that result in DeFi becoming much, much bigger. While a lot of people got hurt by the lending crisis last year. The DeFi market was fine. It was a test that it passed with flying colors.
EIP 1559
Ethereum’s gas-burning function, EIP 1559, was something that was incredibly hyped when it first launched but is something that isn’t talked about quite as much anymore. It has helped Ethereum to cut its inflation rate by more than 90% and during times of peak use can become deflationary too.
EIP 1559 was implemented at a time when the bull cycle was pretty much already finished, which leads me to believe this will become a big story once again in the future. Once the bull market ramps up again and ETH’s use also increases. This will lead to extreme amounts of Ethereum being burned causing a supply shock. All of this could have dramatic effects on the price of Ethereum.
Future Upgrades
Ethereum merging into a proof-of-stake blockchain, EIP 1559, and also the Shanghai update is only the beginning of what’s in store for ETH. Future upgrades will cut Layer 2 fees by nearly 10x, will help layer 1 scale further, and help increase security and trustlessness. We have only seen a brief glimpse of the potential that Ethereum will have in the future
As for the price of Ethereum in the future, no one knows for sure. Last cycle the price reached nearly $5k and that was it being so early in its development road map and being handicapped due to high gas fees. Once those situations continue to improve and move along, the sky is the limit for Ethereum.
How about you? What do you think is Ethereum’s future price potential?
Read my articles first on
or
As always, thank you for reading!
